Standing Committee E

[Mr. Peter Atkinson in the Chair]

Communications Bill - Clause 69 - Permitted subject-matter of access-related conditions

Question proposed, That the clause stand part of the Bill.

John Whittingdale: At the end of the sitting this morning, we were talking about ways of achieving the roll out of broadband. There was universal agreement among members of the Committee that one of our key challenges was to achieve wider access. Another challenge is to try to achieve a more competitive market. In some ways, those challenges may conflict. In other ways, however, it can be argued that achieving a more competitive market may increase the availability and, hopefully, the take-up of broadband.
 There has long been discussion that such an increase in availability and take-up can be linked to local loop unbundling, which has been around for some time. However, it is fair to say that not much progress has been made to date. The local loop is, in effect, the pipe between the exchange and the home, and is the final stage of the telecommunications journey. It can be used to deliver various services, and it is envisaged that one way of achieving greater competition will be to open up the local loop—the final stage of the journey—to operators other than BT. 
 As I said this morning, broadband access may eventually be delivered in various ways, of which ADSL over a fixed wire looks to be the most promising. BT is clearly investing a great amount of money in promoting it. There is also the existing cable network. That is not to say that there are no other potential mechanismsthere is cable, satellite, wireless and local loops. However, in the immediate term, it is fair to say that the mechanism is likely to be fixed-wire delivery. 
 The purpose of local loop unbundling is to try to achieve a degree of competition in that particular sector of the market. It is unrealistic to argue that we will achieve a competing infrastructure. It would clearly be almost impossible for a new entrant into the market to invest in an entirely new network. It would also be fairly pointless. The sector is now firmly governed by European directives, as are subsequent clauses and a large part of this one. 
 It is worth noting that the European regulation on local loop unbundling states: 
''It would not be economically viable for new entrants to duplicate the incumbent's metallic local access infrastructure in its entirety within a reasonable time. Alternative infrastructures such as 
cable television, satellite, or wireless local loops do not generally offer the same functionality or ubiquity for the time being''.
 For that reason, the European Union has attached great importance to the success of local loop unbundling. 
 It has been argued, particularly by BT, that it is perhaps unfair that it should be singled out to be required to unbundle its local loops. It has pointed out that the cable infrastructure now passes some 12 million homes—about 50 per cent. of all properties—and that the same condition should therefore apply to cable operators. To date, Oftel has felt that it is not necessary to request cable companies to open up access to the local loop, although we need to continue to monitor the situation. Does the Minister envisage imposing such access-related conditions on cable companies in due course?

Michael Fabricant: Does my hon. Friend agree that cable companies have at least invested in the latest technology? They provide services to people's homes by coaxial cable, with all its advantages, rather than by copper twisted pair, which causes all the difficulties with ADSL. The prime difficulty is the limitation of 5.5 km from the main exchange, which has to be provided by a fibreoptic feed. Would it not be preferable if fibreoptic feeds, or at least coaxial cables, were provided to every home, which would then have not ADSL but DSL?

John Whittingdale: Clearly that would be hugely preferable. As we discussed earlier, ADSL represents a considerable step forward on the narrow-band access. However, the speeds that will be possible if we achieve the fibreoptic network to which my hon. Friend refers will be vastly faster and will offer a far greater range of services than even ADSL—

John Robertson: The hon. Gentleman may be unaware that copper wire will give all the necessary service. Fibreoptic is not required. So much goes into it that the cost would be astronomical. It would be far more advantageous to put the money into the copper network.

John Whittingdale: To some extent, it depends what is going to go down the wire. I agree that it is ambitious to expect fibreoptic cable to go to every doorstep in the foreseeable future, however desirable that would be. We shall have to take advantage of the existing network. Fibreoptic cable offers great opportunities for linking exchanges, but I am sure that the hon. Gentleman is right in the case that we are discussing—the final stage of local loops going to each home.

Brian White: Is the hon. Gentleman aware that in countries such as South Korea and Sweden, which have a lot of dark fibre in their ground, the public authorities have invested in it and then opened it up to competition? Is he advocating that the Treasury should allow public service investment in fibre?

John Whittingdale: Given the competing demands on public expenditure, I suspect that if the hon. Gentleman were to talk to the Chancellor he might find that he had other priorities. In due course, the market might supply such investment anyway. However, for now we have to work with the existing position. We are dealing with copper wire in the local loop.
 Let us briefly consider the history. For a time, it appeared that the regulator, Oftel, now to be replaced, was trying to encourage the alternative infrastructure. Although it recognised the potential of local loop unbundling, it even talked about building separate buildings next to existing BT exchanges. It concluded that for the time being direct competition to the BT access network would adversely affect the development of competition and would not be in the interests of the UK consumer. 
 A development in Oftel's thinking took place when the current director general, David Edmonds, took up his position. He suggested that trying to encourage infrastructure competition was unlikely to provide the immediate boost to competition that was desirable, and therefore gave a higher priority to achieving local loop unbundling. His main reasons for reopening that issue were that the European Union had already identified it as a priority and that it would be a way of achieving the rapid expansion of new technologies. In 1999, he announced that BT should be required to permit access to its local loops. A target was then set whereby such access should be achieved by July 2001. 
 I do not want to spend a great deal of time going through the entire history of the subsequent, somewhat unhappy, negotiations between BT and the alternative providers that sought to take advantage of the new opportunity of gaining access to the local loop through the exchanges. It was initially suggested that they should focus on a limited number of exchanges—the so-called bow wave process—and that was followed by a great argument as to which exchanges should be opened up first. Companies were then invited to apply for particular exchanges. 
 It was decided that the first exchanges to be opened up should be those where there was a relatively low level of demand—in other words, where there were not a large number of companies asking for access to the same exchange. It can be argued that the consequence of that was that the exchanges that were identified as priorities for opening up were not in the areas where demand was highest. That approach was criticised. Indeed, the Select Committee on Trade and Industry concluded: 
''If the first Bow Wave list has now been largely disregarded, the wisdom of proceeding down that route in the first place must be open to question.''
 Apart from that false start, there was also criticism of BT and Oftel. Several of the other licensed operators—those who sought to take advantage of the situation—had complained to Oftel that BT was deliberately thwarting the progress of local loop unbundling. Several words were thrown around. Operators complained of BT's ''recalcitrance''. The director general of Oftel said: 
''I think there was a series of examples during those months in the early part of—
 the introduction of the process— 
''when BT were deliberately holding back on information, when BT were not progressing the roll-out of local loop unbundling as fast as we would have wished.''
 He went on to talk about ''bitter conversations'' and finally, in a phrase that has been widely quoted, he said that the relationship between Oftel and BT was 
''almost trench warfare for much of the summer.''
 Certainly, BT was not as accommodating to those who sought to take advantage of local loop unbundling as some would have wished. 
 At the same time, some operators were critical of Oftel, saying that it should have moved much more quickly and done more to put pressure on BT to open up its exchanges. One company, Thus, remarked of Oftel's interventions: 
''many of the steps they took were helpful 'but it is a question of too little too late.'''
 The Computing Services and Software Association said: 
''It is now evident that Oftel has failed markedly in its quest to have BT provide access to other carriers at the local loop level.''
 It went on to say: 
''At best Oftel is revealed as an organisation basically powerless to push BT into opening up the local loop. At worst, Oftel will be cited in history as a stunning example of the captured regulator''.
 I do not intend to spend my time being rude about BT because it is moving strongly in the right direction, and to some extent we are revisiting the past in examining its history. That history obviously relates to the clause, however, because it is precisely the challenge with which the new regulator, Ofcom, will have to deal in trying to achieve greater progress if the Government still take the view that local loop unbundling is a priority in achieving a competitive market and wider access to broadband, which we were talking about earlier. 
 It is noticeable that our record in this area does not compare well with the achievements of our partners elsewhere in Europe. Not long ago, the  Financial Timessaid: 
''Attempts to foster competition in Europe's local telephone networks have failed, with Britain among the worst offenders in opening up the market.''
 Figures produced by the European Competitive Telecommunications Association, which is the telecommunications trade body, reveal that less than 0.01 per cent. of European local loop lines have been unbundled to new entrants. On the scale of the achievement in Britain, whereas the Government had set a target of widespread unbundling, earlier this year out of 29 million lines in the hands of BT some 164 had been unbundled. The figure is a little higher now, but 164 out of 29 million gives hon. Members a good picture of the progress that we have made. That compares with 623,000 unbundled lines in Germany, where unbundling started in 1998, and 40,000 in Denmark. The ECTA also noted that France and Spain have barely got off their starting blocks. The figure in France was 400 and in Spain it was 10. 
 Because of the difficulty that a number of companies have had in gaining access on fair terms
 to exchanges, the number of companies in the market has fallen dramatically, which is worrying. Originally, some 40 companies were interested in competing in BT's exchanges, but I understand that the present figure is three. It is clear that at the moment local loop unbundling has stalled. Indeed, in some respects it has gone backwards since some lines that had been unbundled have been lost because one of the companies responsible for unbundling, OnCue Telecom, which had unbundled 40 lines, went into liquidation. The number of lines actually fell from 180 about one year ago to about 150. 
 My conclusion is that local loop unbundling is not really happening. The question for the Minister is whether the Government still regard it as a priority. What does he think that Ofcom can do in order to get it going again? Those alternative operators that still think that local loop unbundling represents a viable commercial prospect say that there are things that could be done to allow progress to be made. They also recognise that Oftel has achieved more in recent months and has certainly begun to chip away at some of the barriers that have been erected. 
 I do not want to go into the details, but there are options such as co-mingling, unescorted access—which should remove the need for expensive, purpose-built equipment rooms—line sharing, perhaps a compensation payments scheme to incentivise BT to reduce delays, and the cost-oriented pricing of back hall circuits. Those elements should help the process along, but in order to get local loop unbundling really going again, we must remove the remaining cost and process barriers, including pricing of back hall, and gain proper access to BT's operational information systems. Continued intervention from the regulator will be required to achieve that. 
 I want to take advantage of the opportunity in this debate about access-related conditions to invite the Minister to comment on the Government's attitude to local loop unbundling. Clearly, it is still a requirement under the European directive and, therefore, we must implement it. In the past, the Government have set ambitious targets to achieve local loop unbundling, but we cannot claim that we have made any progress at all towards achieving it. We are essentially stalled.

Chris Bryant: Is the hon. Gentleman aware that the Conservatives in the European Parliament voted on four separate occasions to delay local loop unbundling?

John Whittingdale: I was not aware of that. Clearly, I will have to have words with my colleagues. I am sure that they had exceptionally good reasons for doing that, and I shall be extremely interested to have a conversation with them and discover what they objected to in the directive. I do not believe that they would disagree with the overall objective of local loop unbundling. On that point, I shall conclude my remarks. I hope that the Minister will take advantage of this opportunity to tell us about the Government's attitude.

Richard Allan: I am pleased that the hon. Member for Maldon and East
 Chelmsford (Mr. Whittingdale) raised local loop unbundling, which is entirely appropriate in a discussion about access-related conditions. This clause, like many others in the Bill, will become increasingly important over time, because it is the one by which, effectively, Ofcom takes on board the powers to dictate to infrastructure owners that they must allow others to use their facilities. The hon. Gentleman rightly mentioned the position of cable companies. Indeed, mobile telephone companies and satellite platform owners may also be affected by the clause.
 It is important to remember first principles: we want the consumer to receive a good range of competitive services through whatever infrastructure is in place. In order for that to occur, investment in infrastructure and services by a range of players is essential. We are trying to reconcile through the Ofcom regulatory framework an inherent tension: if there is too much uncertainty in the market, investment fails—we may be in that situation at present—but if there is too much rigidity, innovation and competitiveness fail. We are trying to balance the two. 
 Our market has developed in a very odd way. The first era was based on the General Post Office-British Telecom investment infrastructure. It was right that that investment was treated differently, because the money was raised under a different premise—the public ownership premise—and the infrastructure was established on that basis. 
 During the second era, which was 1980s Conservative deregulation, cable companies were encouraged to enter the market and were given a different set of rules. Essentially, the premise was that they would not be forced to open up their infrastructure to competitors if they brought in investment and met certain conditions. As private investors with a protected position, they were in a different position. If one considers the current value of cable companies' shareholdings, it is hard to argue that forcing them to open up would enable the creation of more competing infrastructure. In fact, given the current state of investment, the reverse might be true. 
 Then there was the third period, which was the 1990s information and communications technology boom—the dotcom boom, as it has been called. A whole load of different players came in. They were knocking on doors, as the hon. Member for Maldon and East Chelmsford said, and asking for loop unbundling—it was a popular concept. People really wanted to get into the telecoms market but felt that the regulatory structure prevented their doing so. At that time, they could raise the money to do it. 
 If the interest has gone out of local loop unbundling it is, as much as anything, because the people who would have been knocking on doors saying, ''We have the money to put the kit into exchanges to deliver the services'' can no longer deliver that finance. The whole market sector is down and there is a slow rate of return on what is now very reliable telecommunications equipment. Once the equipment is installed, a low unit cost on the services offered is charged, and the rate of return is long. The investment climate has moved against local loop unbundling.

John Greenway: There is another side to the hon. Gentleman's point. During the third phase that he so eloquently describes, many small businesses were attracted to the concept of developing their business through access to broadband. To pick up on this morning's debate, that simply is not happening, whether in urban or rural areas. Does the hon. Gentleman agree that it behoves the Government to make their mind up whether they want to tangible development? If they do, how are they going to achieve it?

Richard Allan: The hon. Gentleman is right. The investment climate could well improve, just as it became worse. When such improvement occurs, we want to attract entrants into the market who will deliver broadband and a whole range of other services. They will be knocking on the door again. We should not limit ourselves to thinking about the BT network. We need to ensure that there is certainty when people raise cash across the infrastructure to offer new services. When making investment decisions people must be certain about the sort of framework for access that Ofcom is to set out.

John Robertson: I have been following the hon. Gentleman's speech with great interest. He has covered several points, but he has not covered the fact that we cannot sell broadband at this moment in time. Even if the unbundling of the local loop happened tomorrow, the fact is that we could not get people to go into telephone exchanges to install their equipment in order to sell broadband. Will the hon. Gentleman tell me what he would do about unbundling?

Richard Allan: The hon. Gentleman tempts me into a broad area. In respect of encouraging investment in broadband services, there is a potentially strong market for some of the services touched on already, especially entertainment-related content, which has already been identified as an important area. There is also a range of functionality in areas such as open source software, which generate a great amount of interest in accessing broadband services. If one wants to download operating systems and applications from the internet, as is increasingly becoming possible, a current dial-up connection will not work very effectively. We are on the brink of a huge explosion in interest. It is a little like the chicken and the egg—which comes first, the exciting content or the access? We need both together. I have no doubt that the functionality that people can achieve through a broadband connection will drive up interest dramatically in the near future.
 Clause 69 is where the access-related conditions will be critical. People may want to build on the infrastructure, or may feel that the only way to develop services is to create an entirely new infrastructure. That would be wasteful in terms of national resource and will also hold back development, as was the case with local loop unbundling.

Brian White: This is an interesting history lesson, and the lesson that comes out of it is that regulators can undermine Government policy. That is one of the key relationships, and the clause is key in ensuring that
 the relationship between a regulator and Government policy is right.

Peter Atkinson: Order. Before the hon. Gentleman replies, I should say that he mentioned that he was coming back to the subject of clause 69. Without wishing to stop him, may I remind the Committee that we are talking about what Ofcom should do in the future? Will hon. Members focus on that rather than history?

Richard Allan: I am grateful for your guidance, Mr. Atkinson. I was immediately hoping to head in the direction that you have suggested.
 I want to look at the issues that Ofcom will address. Clearly, the Government have a strong policy on encouraging the use of broadband, now and in future. Ofcom will have a critical role in that. The relationship between the Government and the regulator, and the way in which the regulator, although acting independently, will be able to take guidance, will be essential. We could take the opening up of the gas market as an example of a steer from Government through which, to use a rugby metaphor, the ball was taken by the regulator and carried forcibly over the line until a touchdown was achieved. Whether Ofcom can deliver the same is critical. 
 It would be a mistake to limit ourselves to thinking about the British telecom networks. Another matter on which Ofcom may be expected to adjudicate is whether it would be appropriate for the cable networks to open up in future to, for example, competing internet service providers that currently cannot access cable networks. The cable operators keep that within their domain, and can choose whether to offer access outside that. 
 The second matter that will be increasingly important is access to the mobile network infrastructure. Issues such as mast sharing have been raised and are very important. Clearly, there is a public desire for mobile phone services, a public dislike of mobile phone masts, and a general interest in reducing the number of masts. However, a potentially anti-competitive interest may need to be reconciled if infrastructure were shared to the extent that operators and markets were no longer competing, and those markets and operators ossified. Those issues are wrapped up together. Access adjudications may become critical when people begin to say that they do not need to set up an infrastructure as long as Ofcom uses its regulatory powers to allow them access to someone else's infrastructure. We will have to judge whether that should be the case. 
 The satellite market has grown dramatically and is now the primary platform for digital television. I do not think that that was envisaged initially; the Government envisaged a much quicker roll-out of the terrestrial digital market. Certain satellite operators have a significant position, and questions about that might be raised in future. I think that it was the hon. Member for Milton Keynes, North-East (Brian White) who said that the clause is critical and is likely to become more so. 
 The operators will not want to miss the boat again, as happened with local loop unbundling. If there is a market opportunity and money is flowing through the markets, ready to be invested in producing better services for the consumer—that is what we are concerned with—we should not miss the boat because there is no avenue in which that investment can take place, the routes through being insufficiently open. Ofcom will not have much time to adjudicate on some of those issues. It will need to respond quickly if investment is to take place and if we are not to end up with a better regulatory framework only when the market has collapsed again.

Andrew Robathan: I shall not come back to clause 69; I shall stay with it. As two members of the Committee have said, the clause is vital for the future development of the telecommunications market and, indeed, to the Bill. It is important that we discuss the clause and tease a few things out of the Minister about the future.
 Local loop unbundling has, so far as I can work out, been a success only in the eyes of BT, which told me that people complain unjustly about it. However, take-up has not been anything like what was expected for reasons which the hon. Member for Sheffield, Hallam (Mr. Allan) identified. There are many reasons, but to suggest that there is not a large market for access to the network through broadband is ludicrous. The market is massive. I come to the subject as a shadow Department of Trade and Industry Minister. Small and medium businesses throughout the country are desperate to get access to the network through broadband. That is why the matter is so important. 
 I am sorry that the Minister for E-Commerce and Competitiveness is not here, because he is a bit of an expert on the subject. He was about to illuminate us on many things before he was cut off in his prime this morning.

Kim Howells: I may not be an expert, as my hon. Friend the Minister for E-Commerce and Competitiveness is, but I know a little about broadband and broadband access. One of the great problems is often the lack of knowledge of the virtues of broadband among small businesses. It is often difficult to get enough businesses to sign up for the clusters so that broadband access can go ahead. It is not a one-way story.

Andrew Robathan: I do not disagree with the Minister. His time at Hornsey college of art was obviously not wasted. He particularly picked up when the hon. Member for Sheffield, Hallam made the rugby analogy, which was perhaps something to do with the Welsh rugby team. I do not intend to stray from the debate, which is about the future of telecoms, not the past. It is about how businesses can proceed.

Peter Atkinson: Order. The debate is about not how businesses can proceed, but the future role of Ofcom.

Andrew Robathan: Indeed, and conditions of access. We should hear more from the Minister about how he sees that and the role of Ofcom developing. Will it sit on
 top of conditions or will it allow them to proceed to the benefit of us all?

Michael Fabricant: But not before the Committee has heard from me. So far, we have had an interesting debate on clause 69. It is an important part of the Bill, but let us ask ourselves why. At present, the provision of broadband is at an early stage. There are various platforms by which it can be delivered. We heard this morning that there is to be satellite provision, although that has its problems because of satellite delay, despite lower orbit satellite constellations being made available as we speak.
 My hon. Friend the Member for Maldon and East Chelmsford mentioned microwave provision and that has worked particularly effectively. Clause 69(2) is required because of local loop unbundling. The position is analogous to that on the provision of electrical power. The successors to the Central Electricity Generating Board are the backbone of the provision of electrical power, while contractors can provide power and distribute it from that network. That, in its own way, has been a successful form of local loop unbundling. As has been pointed out, it has not been too successful at present. I agree with the Minister. While I have no doubt that, if people saw the virtues of broadband, they would want to use it or have access to that e-economy, I do not believe that they understand its real benefits. Sir Christopher Bland of British Telecom said in his letter, to which I referred this morning, that a trigger level of 650 is required for the provision of an ADSL service in Burntwood, but only 174 have so far applied. The reason for that is that people do not understand the benefits of broadband.

Peter Atkinson: Order. I was listening carefully to the hon. Gentleman. I gather that the Committee had an extensive debate on broadband this morning. Clearly, the hon. Gentleman has not exhausted his enthusiasm for the subject, but in all seriousness we are discussing clause 69, which, I reiterate, looks to the future powers of Ofcom.

Michael Fabricant: If sufficient people wanted ADSL, and BT were providing it through the twisted pair, there would be less pressure on Ofcom to provide the local loop unbundling, which is provided for under subsection (2) of the clause. However, that is not the case for the reasons that have been outlined. Incidentally, will the Minister say whether there is a role for the Government to promote how broadband can be used in e-commerce? For example, the Information Committee saw a demonstration yesterday of the virtual private network on broadband, which I must confess seemed slower than citrix, although I am sure that that is not the case. If people saw the benefit of broadband, they would want to use it.
 I turn to a point to which the hon. Member for Sheffield, Hallam alluded when he talked about interoperability in the mobile phone network. Ofcom will have a clear and important role on that. Real questions need to be answered, not only about network provisions made between operators such as One to One, Vodafone, Orange and so on, but about whether roaming should be permitted. That question is
 important, and must be covered by the clause. Ofcom will have to address it. 
 The Minister will know that if he takes his cellphone—mobile phone, as we say in this country—abroad, he can access another network through roaming. However, it is an unfortunate fact that if someone is in a part of the UK where his network does not have coverage, he cannot gain access to another network. Does that subject not come under clause 69? Does the Minister think that Ofcom will be able to say that in the UK, if my Vodaphone mobile phone does not work in an area but there is a signal from 02, I should be able to use that network through roaming? That already happens in the US, and there is no technical reason why the system should not work here.

Kim Howells: I am glad that the hon. Gentleman has raised the matter. A year ago, when in the wilds of Romania, I was astounded to see that precisely what he has described was happening. As one moved quite short distances, it was possible to access different networks successfully.

Michael Fabricant: That is because the British cellphone companies have mutual agreements with cellphone companies outside the UK. They do not have agreements within the UK except for one provision, which is emergency calling. I shall pick on Vodaphone as an example simply because I have a Vodaphone SIM card. Although on the whole that network has good coverage, there are places that it does not cover. If a Vodaphone phone is in an area that the network does not cover, one can access another cellular network only for emergency calls.

John Whittingdale: I am delighted that my hon. Friend has raised the issue, as it is interesting. I have been as puzzled as him about it. I too am a Vodaphone customer, but my phone has a button that allows me to search for different networks. The phone will actually come up with four networks, but only in this country can people not access anything other than their own network. If people are in any other country and do the same thing, they can choose which network to use. One will generally be cheaper than the others, because there will be some arrangement between the companies. The technology is clearly there, as the phone identifies it. We would move towards a more competitive market if we could have an arrangement whereby we had the same ability in this country that we do abroad.

Michael Fabricant: My hon. Friend is absolutely right. There is no technical reason why that should not happen. It does not happen simply because the agreement is not established, and there has been a commercial decision not to establish it. Subsection (4)(a) mentions the ''technical or operational nature'' of conditions. Have the provisions not been made available for technical or operational reasons? The answer is clearly no.

Chris Bryant: I am sorry to stop the hon. Gentleman's Clement Freud impersonation. Does he not understand that, when someone takes out an
 agreement with the mobile phone operator, they enter into an agreement with the network? Why should one network let someone wander off to other networks day in, day out? That would oppose the whole point of the commercial relationship into which one has entered. That is the nature of the competitive environment that the hon. Gentleman praised in Committee only a week ago.

Michael Fabricant: I rarely have to say this, but the hon. Gentleman has got it wrong. The reason why Americans can do just that in the United States—

Chris Bryant: They cannot.

Michael Fabricant: They can. Americans can do that because when they move into the area of another network, the billing system works in such a way that Vodaphone—if it were Vodaphone—benefits: a cross charge is made.
 The hon. Gentleman shakes his head in disagreement—now he is nodding in agreement—but operators in the United States and Canada have entered into a commercial agreement that allows people to roam between networks, and the operators benefit because of cross-billing. When one signs up for a SIM card with a particular network, although, as the hon. Gentleman will know, SIM card technology is not widely used in the United States, one looks to see whether that network has roaming agreements with other networks, and those networks that do not have such agreements do not tend to do very well. I shall give way to the hon. Member for Falkirk, West (Mr. Joyce), who is famous for his wheel.

Eric Joyce: Just to clarify that point, Vodafone has an agreement with companies abroad, so that when we go abroad, we can tune into other networks. That is analogous to the situation in the airline industry, where there is Star Alliance and Oneworld Alliance. It is up to the companies whether they have inter-relationships, such as some companies in the United States do, but they do not all have them. It is simply a function of the market.

Michael Fabricant: The hon. Gentleman makes a sensible point, but that is necessary in the United States because it covers such a large area. In the United Kingdom, it was initially thought that there would be universal access to all networks, but that is clearly not the case. The hon. Member for Rhondda (Mr. Bryant) should know that. I often go walking in Wales and find that I can get a signal, but not from Vodafone.

John Greenway: My hon. Friend keeps talking about the United States of America, but one need not go that far. If I cross the channel into France, I find that my mobile phone operates in Europe, although it does not operate in the United States. On the whole, in Europe, my phone will automatically tune into four, if not five, different networks. It beggars belief that Ofcom will not have to address that issue because, as the Minister conceded, the standard of service provided to mobile phone customers here is not as good as it is on the continent. How on earth does he think that mobile phone companies will be able to persuade people to
 sign up for text images without interoperability between networks?

Michael Fabricant: I do not want to correct my hon. Friend because he is a very good friend, but there is a slight difference. There are no such agreements within France, so someone visiting the United Kingdom from France will find that he or she can access perhaps all the British networks because that person is travelling abroad. My point is that, within the United States, a person who subscribes to a United States network can access other networks in the United States and, indeed, in his or her own state.

Andrew Robathan: I want to draw my hon. Friend's attention to the role of Ofcom and the issue of access. Surely, the role of Ofcom, the regulator, is to look after not only the industry, in its broadest sense, but consumers. Of course some commercial companies do not wish to enter agreements because they may do better by not entering agreements, but is not the whole point of having a regulator, which is especially relevant to the subject of conditions of access covered by clause 69, so that he can look after the interests of consumers and encourage, or perhaps cajole, companies to enter such agreements?

Michael Fabricant: My hon. Friend has made a powerful point. Ofcom has a clear and important duty to protect the consumer, and clause 69 is of paramount importance in achieving that. It is to the benefit of all networks to see that there is interoperability between them and, as I said to the hon. Member for Rhondda, they would benefit financially from that. I hope that those who refuse to co-operate will be condemned by Ofcom under the clauses and conditions discussed earlier this morning. I am interested to hear from the Minister whether he envisages a real role for Ofcom in respect of the roaming that he talked about in—was it Romania?

Kim Howells: Yes.

Michael Fabricant: I do not believe that in Romania, as in France, there is sharing between networks, if there is more than one network there. Why cannot the United Kingdom do as they do in the United States and Australia and share?

Brian White: I am very confused, because I thought that the argument from the Opposition was to remove the powers of the regulator to deal with aspects of the market and to withdraw regulatory authority. Yet everything they are saying at the moment is about regulatory creep and adding to the role of the regulator.

Michael Fabricant: The hon. Gentleman has got it wrong. This party cares for the vulnerable and in this instance mobile telephone users are vulnerable. With mobile telephone calls charged as they are, there should be interoperability.

Chris Bryant: While the hon. Gentleman is dealing with that, I should point this out. Is he really suggesting that Ofcom or the Government should ensure that every mobile operator will make provision that every time someone switches on a mobile telephone they can choose which network to use? That is the direction in which the hon. Gentleman
 seems to be going. If so, he is suggesting a level of intervention in a market—mobile telephony—which he and his colleagues said last week was functioning perfectly. I think most people would be surprised to hear that.

Michael Fabricant: I do not think that they would, but that is not what I am suggesting. I am suggesting that when a mobile phone is switched on it automatically homes in to the network according to the SIM card. Only when it is out of range does it start to roam. That is how the GSM network works in any event.
 Let me move to a different issue: charging for calls from mobile phones to land-lines and calls from land-lines to mobile phones. Although this appears later in the Bill, in order to ensure fair charges, we must ensure that the technology is made available to enable interoperability between land-lines, GSM and other mobile network calls. Does the Minister see a role for Ofcom in that? Does he agree that we need to limit the cost of calls from mobile phones to land-lines and from land-lines to mobile phones, and that to help to limit that cost it may be necessary to introduce technology that is compatible between all networks. Does he believe that Ofcom has a role in that? 
 Another area in which there should be interoperability of networks—the hon. Member for Sheffield, Hallam may well agree—is encryption of e-mails. He will know that if an e-mail is encrypted and sent out of a particular local area network or through an operator such as AOL, the e-mail often does not reach its destination. If e-commerce is to be successful, as I hope it will be with the spread of broadband—I also hope that the Minister will answer the earlier point about how broadband can best be promoted—does he agree that e-mails will increasingly have to be encrypted? He will know that when one orders a book from Amazon—[Interruption.] I am sorry, I did not hear that.

Peter Atkinson: Order. We are going wide again.
 Can I say to the Committee that it was often said that the best Committees were those on which Members had no knowledge of the issue being debated? I am beginning to believe that there may have been some truth in that.

Michael Fabricant: Clause 69(3)(a) talks about access-related conditions where there is shared use of electronic communications apparatus. I think that that includes not only hardware but software. Would the Minister like to see Ofcom, if not imposing rules, at least providing guidance to ensure that encrypted emails can be transferred from one network to another?
 That will be very important. The Minister probably knows that, at the moment, if he orders a book from a website such as Amazon.com he will fill in a web form. That form will automatically be encrypted when he gives his credit card details. On the whole, it is a reliable system. However, if one books a hotel abroad and then e-mails the hotel, the hotel may then ask for credit card details. Perhaps I am unwise, but if that happens to me, I then e-mail my details to the hotel
 abroad. That is not encrypted, so someone could have access to my credit card information via my e-mail. 
 Does the Minister not agree that people will increasingly want to send encrypted information abroad and in the United Kingdom, but that they are currently often unable to do so because they are crossing networks? What will Ofcom's role be in ensuring that universal encryption can be achieved if necessary and that, where required, encrypted e-mails can cross the boundaries between networks? [Hon. Members: ''None.''] Several Government Members say none, but I suspect that that is because of their lack of understanding of the way in which business works. 
 The present situation demands that there are encrypted e-mails to enable people to send, as I have mentioned, credit card data and perhaps other data. Ofcom must address such matters. After all, its whole raison d'etre is to address the new technologies. Those include projects such as Ocado, which Waitrose is using, and others, for the home delivery of food. Again, one sends encrypted information across network boundaries containing one's credit card, or John Lewis account, details. There must be security, and Ofcom has a role in that. How does the Minister see that role being performed? Will it be through guidance, or through the imposition of very strict rules? If the latter, does he think that there is a danger of going too far, and imposing conditions that might limit the spread of broadband and other networks, and increase the ultimate cost to consumers? 
 There is a golden opportunity here for Ofcom to create a new e-commerce. It is up to the Minister to decide whether that opportunity will be seized.

Kim Howells: I know that it will be deeply unfashionable, Mr. Atkinson, but I shall deal with clause 69.
 The preceding group of clauses—61 and 68—dealt with universal service obligations, the way in which universal services are to be determined and how that provision is to be assured throughout the United Kingdom. We now turn to access-related conditions. As hon. Members will recall, under clause 42 access-related conditions will be imposed case-by-case on individuals or communications providers and persons who make associated facilities available. They are unlike the general conditions, which apply to all communications providers or all providers of a particular description. 
 The conditions can be imposed on any communications provider or persons who make available associated facilities—in certain cases, they can be imposed on any person—where that is necessary to meet the objectives of the EC communications directives in respect of securing access. 
 The clause sets out the permissible content of access-related conditions. There are four permissible types of access-related conditions. First, Ofcom may set access-related conditions for the purpose of
 ensuring a level of network access and interoperability that will secure efficiency, sustainable competition and the greatest possible benefit to end users. I will try to link my answers to hon. Members' questions to those conditions. Clause 70 provides more specifically for types of conditions within the category. 
 Secondly, Ofcom may set access-related conditions to secure the sharing of apparatus or of costs incurred by those to whom the electronic communications code applies, in cases in which there is no viable alternative. That enables Ofcom to mandate the sharing of infrastructure and other facilities where is no viable alternative. 
 We have heard a great deal about global unbundling. As someone who recently has an ADSL link in my constituency of Pontypridd, and who has got it to work—after a month—I want to say that the point made by the hon. Member for Lichfield (Michael Fabricant) bears making again—although perhaps not at the same length. It is a real problem trying to get enough businesses to realise the virtues of broadband and to come together in order to get access to it. 
 The hon. Member for Lichfield asked me about promoting broadband. I believe that the hon. Member for Sheffield, Hallam said that content is the most important element or variable in the equation—if he did not say that, he should have done. Call me old fashioned, but I cannot see why anyone would want to get broadband unless there was something to watch or access on it or unless it was going to provide a superior service. Content is important. 
 The hon. Member for Lichfield is right: we have to do a great deal to educate people about the virtues. I do not normally think that the role of Government includes bailing out private companies, so my next point may come as a surprise. Ofcom probably has a role to play in relation to the functions of promoting media literacy, which were dealt with in clause 10. It has some remit for doing that.

Brian White: Does the Minister envisage the prime role of Ofcom in terms of access conditions or in terms of promotion and generally making people aware?

Kim Howells: Those functions are not necessarily exclusive. I have spoken to my hon. Friend about this point before. Ofcom's role in ensuring that access is there is very important, but that sits nicely alongside a broader discussion about the virtues of broadband and what might or might not be possible in respect of ensuring that people take advantage of it.
 An interesting experiment is currently taking place in my constituency. It is a pilot project involving Radiant, a company that provides a wireless mesh system—I hope that I have remembered the correct technical term. That offers tremendous potential in areas where the topography is difficult such as the constituency of my hon. Friend the Member for Rhondda and my constituency. I understand that it is working in partnership with BT. I hope that that pilot project continues because it is important. We have heard a lot this afternoon about local loop unbundling, copper wires and coaxial cables. There is also satellite. The technical and financial achievements
 of BSkyB have been extraordinary. It is doing a lot of work—

Michael Fabricant: And taking big risks.

Kim Howells: Certainly, it is taking big risks in developing the technologies for us to access broadband and work with it in ways that are not possible at the moment, although I am convinced they will be in the future. We should not assume that one technology will transform this country. There are many possibilities and we must look at them all.

Chris Bryant: My hon. Friend makes a valid point. Different technologies may well solve the problem of access to broadband services. Indeed, the Welsh Assembly is making sure that the pricing structure for satellite is subsidised to match that for ASDL through BT; the price is the same. That will enable rural and semi-rural areas to have access to broadband services much faster. Does he think that Ofcom will have a role in overseeing subventions such as that introduced by the Welsh Assembly?
Dr. Howells rose—

Peter Atkinson: Order. Before the Minister answers that question, I remind him that we are not having a general discussion about broadband. We are talking about access-related conditions.

Kim Howells: Yes, Mr. Atkinson. I apologise. I will press on. I will not be drawn by my hon. Friend's intervention to defend the Welsh Assembly, keen fan though I am.

John Whittingdale: The Minister said that he has finally got access to ADSL. I assume that he has got that from BT and not as a result of an unbundled local loop. He also referred to wireless mesh networks, satellite and other potential ways of distributing broadband. That adds to the impression that a number of people have about local loop unbundling. It was held out as being the way to obtain more competitive markets and to roll out broadband access, but because progress has been so appalling people have rather given up on it and are looking at alternative technology to achieve that objective. Does he feel that too, and do the Government still attach the same priority to local loop unbundling as they did two or three years ago?

Kim Howells: I firmly believe in what I said a few moments ago about alternatives and the progress that has been made with BSkyB and other technologies. I stand by that. The Government have to be technology neutral in much of this. I would certainly expect Ofcom to keep the situation firmly under review. The hon. Member for Maldon and East Chelmsford mentioned that over the past year Oftel has completed a step change in the way in which it has dealt with this. I am keen to see bundles of local loops unbundled as soon as possible. There is no question about that.
 It would sound strange if I said that I did not have confidence in this creature that we are creating in the Bill to ensure that, wherever necessary, steps are taken both to review what is happening in that market and to act in a way that will enable competition to help all the other technologies that I have mentioned. I will
 certainly not pin my colours to the mast of local loop unbundling. There are many other techniques, both current and future, that could help do the job equally well. 
 Thirdly, Ofcom may set access-related conditions of a technical or operational nature to ensure that the operation of an electronic communications network remains consistent with any network access obligations that may be imposed under clause 83(3). The obligations may be imposed either on the operator who is required to provide access to the network, or on the beneficiaries of the access. 
 Fourthly, Ofcom may set access-related conditions in respect of conditional access systems. Clause 71 deals in greater detail with conditional access conditions.

Michael Fabricant: I do not want to press the Minister if he is unable to answer fully now, but I suspect that he saw the logic behind my point about roaming within the United Kingdom where one's own network is unavailable. Would what the Minister just said apply to access from one mobile network to another and, if so, should Ofcom have a role in ensuring that roaming within the UK between UK telephone networks is made available?

Kim Howells: I certainly believe that Ofcom should examine that issue. One of its central remits is to promote and encourage competition whenever possible, so it should examine the contractual arrangements presently in place. As my hon. Friend the Member for Rhondda made clear, that is what we buy into when we purchase our mobile phones. We enter into a contractual arrangement, which will have certain limitations. Incidentally, I am appalled to hear that the hon. Gentleman takes a mobile phone with him on walks. It drives me insane when I am walking in the Welsh mountains, where one hardly sees a soul. If I hear a phone going, it is usually Peter Hain. [Hon. Members: ''Who?''] I should say my right hon. Friend the Secretary of State for Wales, who, though a keen and fine walker, simply cannot leave his mobile phone at home. [Hon. Members: ''He's probably lost.''] My right hon. Friend has never been lost.
 The powers are necessary in order to secure and support effective competition in the provision of communications services, so the clause should stand part of the Bill. 
 Question put and agreed to. 
 Clause 69 ordered to stand part of the Bill.

Clause 70 - Specific types of access-related conditions

Peter Atkinson: I remind the Committee that we spent one hour and a quarter on the preceding clause. If members of the Committee do not want to sit very late or throughout the night, they have only about 15 minutes for the rest of the requisite clauses to reach the deadline. I hope that they will bear that in mind as we progress.
 Question proposed, That the clause stand part of the Bill.

John Greenway: I promise not to take as long as during the preceding debate, but clause 70 poses some important issues. I want to debate what Ofcom will do in future about the specific types of access-related conditions to which the clause refers—application programme interfaces and electronic programme guides. I confess to being no expert on application programme interfaces: in fact, I had some difficulty even understanding the definition.
 I shall not bore the Committee on that point, but I do want to say a few words about electronic programme guides, which the Minister knows is one of the current flashpoints between public service broadcasters and satellite and cable operators. Clause 70 allows Ofcom to set access-related conditions. The key question is how Ofcom will use the power. 
 In the same spirit in which the Minister said a short while ago that the Government were technology neutral, I have no intention of coming down on one side or the other of any of the commercial arguments between the PSBs and the platforms. As the Minister knows, there are opposing arguments but the Committee has a duty briefly to air them to shed light on how Ofcom will deal with them, which it will have to do. 
 Clause 299 requires Ofcom to have a code of practice, which has yet to emerge. The prominence of programming displayed on EPGs is of particular concern to S4C. The Minister and the hon. Member for Rhondda will know that that matter is a particular bête noire for S4C. It is an extreme point, but shows the challenge faced by Ofcom in resolving such issues. 
 I am sorry that the hon. Member for Ceredigion (Mr. Thomas) is not present to contribute to the debate, because he would have a lot to say about the matter. Hon. Members will be reasonably familiar with S4C's point, which I do not want to labour, but in Wales if one has a Sky dish and receiver, channel 104 is S4C, not Channel 4. However, my briefing note from S4C says that people who receive their signal through a cable system get something called channel 7. The channels are certainly not in the same order as in England.

Brian White: Is the hon. Gentleman saying that there should be a single EPG for all platforms, or that individual companies should be able to make up their own numbering systems?

John Greenway: The code of practice should deal with that issue.
 Another problem is potentially more difficult. I do not know whether you were in the Chair the other day, Mr. Atkinson, when I said that I could not read my pager without my spectacles. I am adept at the Sky zapper, though, and know my way around all the channels, including all the marvellous radio channels that we can access through Sky. Not everybody is so adept—people with disabilities, for example, whom we mentioned last week. 
 There are lists of dedicated channels, but I understand that if one looks through the EPG for
 children's channels, the ones that come up do not provide information for any children's channel in the Welsh language. That is an issue for S4C and for Welsh viewers. Although I understand the technological difficulties—

Chris Bryant: Will the hon. Gentleman give way?

John Greenway: Let me make this point because it may help the hon. Gentleman. When I look at the sports channel page on Sky, it is strange that I see the dedicated sports channels, but not whether there is a rugby international on BBC 1 or cricket on Channel 4. I am not suggesting at this juncture that the technology exists to see all the possibilities, but a key feature of the Bill is to try to deal with future problems—as you reminded the Committee, Mr. Atkinson, during the last debate. In the end, Ofcom will have to deal with the matter.

Chris Bryant: I sympathise with the thrust of what the hon. Gentleman says, but the best place to have that debate is on clauses 299 and 300, in which much of the relevant matter is made explicit. By the time we get to clause 299, he might properly understand the S4C issue.

John Greenway: I do understand the S4C issue.

Chris Bryant: No, you do not.

John Greenway: With respect, I have spent considerable time talking to S4C about the issue and I promised that if the opportunity arose I would raise it in the Committee. I have not raised the issue in such a way as to give my view about who is right or wrong in the argument that S4C has advanced. The hon. Gentleman says that we might have the opportunity to consider the issue again in relation to clause 299, but we simply have no idea whether time will allow us to do that. Time certainly allows us to do that now.

Andrew Lansley: Obviously, clauses 299 and 300 will allow a discussion of the code and the prominence that is to be given to the public service broadcasters. However, it is only at this point that we can examine whether proper provision is being made for due prominence on fair, reasonable and non-discriminatory terms for commercial broadcasters without public service obligations.

John Greenway: My hon. Friend makes a good point. I said in response to the Minister, who commented from a sedentary position, that I used the S4C issue simply as a way to illustrate difficulties. There are many other issues that one might have addressed, but I did not want to detain the Committee unnecessarily, since time is moving on. The answer to the point about whether we should have this debate under clause 299, notwithstanding the excellent point that was made by my hon. Friend the Member for South Cambridgeshire (Mr. Lansley), is that clause 70 allows Ofcom to set access-related conditions, whereas clause 299 deals with the code of practice for electronic programme guides, which is a different matter. The Committee needs some guidance on how Ofcom will use the relevant power. We want the Minister to address that issue.
 The provisions of clause 70—indeed, of all the clauses in this part of the Bill—replicate the directives. We must accept the provisions of the directives and the fact that, to a great extent, many of the clauses might not be amendable by the Committee other than in areas in which the Government might have strayed in drafting. We discussed that earlier in relation to gold-plating. We are not, however, addressing the issue of the provisions of the directive. The issue is how Ofcom will use the relevant powers. 
 I am sure that those who are affected by the powers would like some early indication about how Ofcom will proceed. Those might include the companies that produce the programmes, which are concerned about the programme guide giving them sufficient prominence—my hon. Friend the Member for South Cambridgeshire mentioned that—or the providers of delivery platforms, which are concerned that difficult conditions might be imposed on them regarding their EPGs. 
 In answer to the point that was made by the hon. Member for Rhondda, if Ofcom's intention is to rely exclusively on the code of practice, perhaps we need to see a draft of that code before we discuss the code in relation to clause 299. Certainly, that clause provides a requirement for a code. These powers are important and they will affect viewers and their experience. 
 Many issues relating to this part of the Bill might appear to be as dry as dust, and to have the consistency not of spaghetti, but of linguini, as we try to trace the threads from one place to another. These matters are difficult and complex, but there are some elements in the provisions that directly affect consumers' experiences. EPGs form one such element. I hope that the Minister will respond in the spirit in which I moved and opened the debate.

Brian White: The hon. Member for Ryedale (Mr. Greenway) has covered a number of points about disability and about the generality of the electronic programme guide and I will not repeat those. However, I have a couple of questions.
 As EPGs develop and devices such as TiVo become available, programmes will be viewed at times other than those listed and will be broken into different genres. It is debatable whether the definition in the clause is sufficient to achieve that. I am sure that the Minister will assure me that it is, but is it future proof? I am sure that it covers the current situation, but will he assure me that it will allow Ofcom to deal with the technology as it develops and as EPGs become much more sophisticated? 
 That brings me to another point. In a previous debate, we heard about the problems of local loop unbundling. I have no wish to return to that discussion, except to say that one of the problems that Oftel had at the time was the lack of skilled resources, because other companies had pinched them. If we are to get the conditions right, it is important that Ofcom has the skilled work force necessary to deal with some of these key issues. Will my hon. Friend assure me that the skills set available to Ofcom will enable it to address those issues as they develop, especially with regard to disability and EPGs?

Richard Allan: I want to clarify the question of scope. The hon. Member for South Cambridgeshire helpfully intervened to say that this might be the only time when we can talk about differential access to key positions on EPGs for services that are not public service broadcasts. That is important. I was trying to work out how that related to clause 299, and initially believed that clause 70 dealt with technology while clause 299 dealt with content. I now understand that some content issues are included in clause 70.
 Will the Minister clarify whether the intention is that access-related conditions in respect of EPGs stop at the point of defining the technology? In other words, can the controller of an electronic programme guide satisfy the access-related conditions by accepting input to a defined standard from other broadcasters? That is a key point, as each broadcaster submits its input for incorporation into that EPG. Do the access-related conditions intended under the clause simply go to that point of defining the technology and the information formats, or do they go further by trying to define, for example, relative ranking within the EPG as presented to the public? That is an important scoping point, which needs to be addressed. 
 I thought that I understood the intention, because I thought that I understood what an application programme interface is. However, as I read the clause, I realised that we were talking about something completely different from the common understanding. That is a serious point, because there is potential for great confusion. An API—application programming interface, as it is usually referred to—is a well understood term in the context of software, and in subsection (3), it is defined in the context of software, which makes it especially confusing. The ''programme'' referred to is not a computer program, but a television or radio programme. Further into the definition, we have ''programme services'', and if we skip to the great definitions clause—clause 390—''programme service'' lists TV and radio programmes, and so on. 
 My point may seem esoteric, but when drafting legislation, it is important not to include language that will confuse the public. The phrase ''application programme interface'' is a poor use of language in this context, because people will understand it to mean this technical thing called an API, which is a way of defining how other people can plug their modules into a common piece of software. That is not what the clause intends, yet we are using language that appears to suggest that it does. I hope that that serious point is of help to the Minister. 
 I have another technical point. The last part of subsection (4)(c) confused me utterly. I wondered whether an ''s'' was missing. Subsection (4)(c) talks about 
''allowing a person to become the end-user of a description of public electronic communications service.''
 Will the Minister clarify what it means to be 
''the end-user of a description''?
 Does that mean the person who is looking at an electronic programme guide is therefore looking at a description? If that is the case, I would have thought {**!23**}that ''electronic communications services'' was intended. I would have understood that; instead, I am confused. Can the Minister clarify the phrase? Is the problem the way in which I am reading the provision, or is it not worded correctly? It is a key area, as was pointed out earlier. While I appreciate that we are trying to describe something complex, there could be more clarity in the phrasing used.

Chris Bryant: I, too, shall speak briefly about APIs. Can the Minister clarify my understanding that that is one of the more important relationships between broadcasters and operators of the set-top box? It is vital to any broadcaster producing an interactive service that will be transmitted to the viewer via a set-top box to have full, prompt information about the technical standards of what is inside that box—the API or operating system. That should be provided as swiftly as it is by any other broadcaster integrated with the satellite operator.
 I can give a brief example. A few years ago, Sky developed interactive sports viewing—it was able to give viewers the opportunity to choose camera angles and to decide from which side of the pitch they wanted to watch a match. It was an attractive model. For the first year and a half, it was available only on Sky sports channels, because the information was not passed in a timely way to other broadcasters. For instance, the BBC had interactive rights for Wimbledon—three years ago, it should have been able to give people a choice of match and camera angle; viewers could have chosen to receive information about players and so on. However, the BBC was not able to provide that service. 
 The clause would make it possible for Ofcom to ensure that all broadcasters had equal access to the information that they needed to provide services through the set-top box. It is, therefore, an important clause.

Andrew Lansley: I apologise that I did not hear the whole debate on clause 69. I shall try not to duplicate it or say anything out of order on this clause.

Peter Atkinson: That will be hard.

Andrew Lansley: So I understand.
 My hon. Friend the Member for Lichfield mentioned mobile phones. Judging by the Minister's response to clause 69, I am not sure whether the matter that I have in mind was included in the debate. It is covered by clause 70(1)(b), which deals with interconnection. That is an important aspect of the process of securing access. The access directive stresses its desirability and describes the physical and logical linking of public communications networks between public network operators. 
 I take the point that the Minister cannot discuss the matter in any detail because we are awaiting the Competition Commission's conclusions in relation to fixed-line access to mobile phones. However, he made a point about contracts. When people enter into contracts with mobile phone networks they do so as 
mobile phone users, not on behalf of every fixed-line user who wants to speak to them. If the issue that is at the heart of the Competition Commission's examination is how to secure competition, the best way to achieve that is not necessarily the imposition of price controls. That would probably delay the introduction of competition, even if it delivered benefits that would not otherwise be available to consumers in the meantime. 
 The best way to introduce competition might be to allow interoperability between mobile phone networks to the point at which a substantial part of the carriage from a fixed line access to a mobile phone can use whichever network will do the job on the best terms. I will not dwell on that, as I could not explain further the technical means of doing so, although I understand that those technical means exist. It has been to the advantage of mobile phone operators that, for that purpose, they have had separate networks and captive consumers when fixed-line telephones are trying to reach a given mobile phone. I wanted to make that point about clause 70(1)(b) and interconnection. 
 Further to the point made by my hon. Friend the Member for Ryedale, the issue is essentially about commercial broadcasters. The code will be able to deal with many of the interests of public service broadcasters. The scrutiny Committee referred to EPGs, and the Government, in their response, took the view that the two clauses would allow the necessary protection for commercial broadcasters because of the imposition of fair, reasonable and non-discriminatory terms, as specified in clause 70(2). 
 However, we do not know from the EU directive or from the clause whether the requirement to be fair, reasonable and non-discriminatory relates to financial terms alone, or to due prominence. We do not know whether that sort of discrimination can occur if someone who is packaging channels and has control of an EPG can control due prominence in a way that is, in market terms, highly discriminatory. All of us have encountered commercial broadcasters who, in their access through the Sky EPG, have sometimes taken the view that they have been subject to substantial disadvantage in the marketplace because of their relative prominence. We all know that certain channels must be given due prominence, because the market wants more access to some channels than to others. How far can the fair, reasonable and non-discriminatory criteria take us? Will they be able to resolve issues of due prominence in relation to the desires of end users?

Kim Howells: Perhaps I can try to answer some of those questions.
 The hon. Member for Ryedale made his point after discussions with S4C, but, as my hon. Friend the Member for Rhondda made clear, the issue would be better debated under clauses 299 and 300, which deal with the key issue of due prominence. Clause 70 deals with operational and technical issues related to access. However, I accept the hon. Gentleman's point, and I am sure that we will have a proper debate on the matter in due course. 
 The hon. Member for Sheffield, Hallam made a pair of observations that almost flummoxed me. I understand that the definition of API in the Bill was taken from the framework directive, and may not mean the application programming interface, which he mentioned. However, I will check that.

Michael Fabricant: Will the Minister give way?

Kim Howells: I will give way in a moment, after I have dealt with the point made by the hon. Member for Sheffield, Hallam.

Michael Fabricant: In a spirit of brevity and helpfulness, I was simply trying to point out that although the hon. Member for Sheffield, Hallam had a point, his sort of program is spelled with a single ''m'', whereas the programme referred to in the Bill is spelled ''programme''.

Kim Howells: I thank the hon. Gentleman for that intervention. I am sure that we have all benefited from it.
 I will check whether the word highlighted by the hon. Member for Sheffield, Hallam is ''service'' or ''services''. With regard to the point about coverage of APIs made by my hon. Friend the Member for Rhondda, I can confirm that clause 70 will give Ofcom powers to regulate access to APIs. 
 Clause 70 is closely related to clause 69, which sets out the permissible categories of access-related conditions. Under clause 42, access-related conditions are to be imposed case by case on individual persons or communications providers and persons making available associated facilities. That is unlike the general conditions, which apply to all communications providers, or all providers of a particular description. These conditions can be imposed on any communications provider or person making available associated facilities, and in certain cases on any person, where that is necessary to meet the objectives of the EC communications directives in respect of securing access. 
 Clause 70 sets out more detail about certain types of condition that may be set under clause 69(2). That deals generally with conditions to ensure a level of network access and interoperability that will promote efficiency, sustainable competition and the greatest possible benefit to end users. Clause 70 specifies that such conditions may include obligations designed to ensure end-to-end connectivity. It provides that such conditions may be set where Ofcom considers them necessary to secure the provision of application programme interfaces and EPGs on a fair, reasonable and non-discriminatory basis. The measure also provides that persons can have access to such digital programme services as Ofcom may determine. 
 As I understood it, the hon. Member for South Cambridgeshire asked whether the phrase ''fair, reasonable and non-discriminatory'' covered due prominence. The directive is without prejudice to presentational aspects specifically regulated for PSBs under clauses 299 and 300. The matter may be covered more generally by FRND to the extent necessary to ensure sustainable competition, efficiency and the 
greatest possible benefit to end users. I hope that that helps the hon. Gentleman. I do not think that it answers all the questions that he asked, but it is a possible yes. 
 The requirements are necessary to transpose effectively certain requirements of the access directive. However, the clause makes it clear that the specific examples are not to be taken as restricting the obligations that might be imposed under the more general provisions of clause 69(2). Those provisions are necessary to ensure that the requirements of the access directive are clearly and accurately transposed into UK law.

Question put and agreed to.

Clause 70 ordered to stand part of the Bill.

Clause 73 and 74 ordered to stand part of the Bill.Clause 75Market power determinations

Clause 75 - Market power determinations

Andrew Robathan: I beg to move amendment No. 80, in
 clause 75, page 72, line 36, leave out 'due' and insert 'utmost'.

Peter Atkinson: With this we may discuss the following amendments: No. 81, in
 clause 75, page 72, line 42, leave out 'due' and insert 'utmost'.
 No. 82, in 
 clause 79, page 75, line 41, after 'identification', insert ', taking utmost account of all applicable guidelines,'.

Andrew Robathan: These small amendments would replace the word ''due'' in clause 75 with ''utmost''. The reason for that is straightforward. Article 15(3) of the framework directive states:
''National regulatory authorities shall, taking the utmost account of the recommendation and the guidelines, define relevant markets''.
 £Why have the Government toned that down? They might give Ofcom more power than the directive intended and so give less protection to those in the market. The directive would apply particularly when national regulatory authorities were carrying out market analysis for SMP purposes. 
 The clause refers to ''due account'', which may not be adequate in respect of implementation, as it gives Ofcom too much discretion to ignore the Commission's guidelines on market analysis and recommendations on the relevant markets to be analysed. The amendments would simply bring the clause into line with the requirements of the directive.

Andrew Lansley: There is a risk of anticipating later clauses, but as it is a general question about how the significant market power conditions will work, it might be better to raise it now. The Minister may recall that one of the objectives of the scrutiny Committee was to align the process of market analysis and market power determination in the Bill more accurately with those in the directive. In their response, the Government did that for some of the later clauses more accurately in relation to things such as the periodic nature of reviews.
 One of the things that they have not done—I suspect that that is because of the different structures 
 of the legislation and the directive—is to reflect the precise process by which the directive sees SMP conditions being arrived at. If I render it correctly, the commission defines the market and sets guidelines; Ofcom conducts an analysis; and it then decides whether or not a market is effectively competitive. If the market is not effectively competitive, Ofcom then goes on to identify the person or persons who have significant market power and to whom conditions might be applied. 
 The Government, in what appears a straightforward way—it seems to be almost a simplification—have cut out the middle bit and are going straight from determining the market power to identifying those with significant market power and applying the conditions to those. Logically, the absence of anyone with significant market power implies that the market is effectively competitive. That is how I understand the structure, but the process of determining whether the market is effectively competitive has a benefit in relation to the directive. 
 Article 16(3) provides that when the regulatory authority concludes that a market is effectively competitive, it not only means that that national regulatory authority cannot then apply significant market power conditions, but that: 
''In cases where sector specific regulatory obligations already exist, it shall withdraw such obligations placed on undertakings in that relevant market''.
 £That is apposite to the initial market analysis rather than the review, and I do not find that provision in the legislation. I cannot find the process that says that we should determine whether the market is effectively competitive and, if it is, that we should remove all those obligations. 
 In a nutshell, and having bored the Committee about how I arrived at it, my question is where is the provision in the Bill that provides that having established that a market is effectively competitive and that there is no case for applying SMP conditions, it is also an obligation on Ofcom to remove sector-specific obligations that may have pre-existed in relation to undertakings in that market. I cannot find it.

Stephen Timms: Let me comment on the specific terms of the amendment moved by the hon. Member for Blaby (Mr. Robathan). First, however, I apologise to you, Mr. Atkinson, and to the Committee for my late arrival. I am pleased to find you looking after the Committee.
 There are a number of examples, rather like the one given by the hon. Gentleman, of the words in a Bill being not quite the same as those in a directive. That is because the conventions and the principles of interpretation of UK law are not the same as those for European Community law. It is not always possible to use the literal words of the directives in order to obtain the intended effect. I put it to the hon. Member for Blaby and the Committee that it is not sensible simply to copy the text of directives into UK 
legislation. The term ''utmost account'', which the amendments would add to the Bill, is not used in UK legislation. We have done the right thing by using a term that is more conventional in UK law than the term in the directives. 
 I would also make the point to the hon. Member for Blaby that the wording is a little different from the wording in the draft Bill, which follows from comments that were made by the Joint Committee. The draft Bill contained the phrase ''have regard'', and we have gone further. The Joint Committee made a fair point that we needed to change the form of words in order to reflect the directive in the Bill. The form of words on the face of the Bill achieves that and it would not be sensible to use the precise words of the directive.

Andrew Robathan: I will not necessarily argue the toss with the Minister over this, but will he reassure me on a point? I am not a lawyer, although we received fairly expensive legal advice on these points—luckily, we were not paying. Will he assure me that, in legal terms, ''due account'' means the same as ''utmost account'' for these purposes? To a layman, the word ''utmost'' is obviously much more emphatic than the word ''due''.

Stephen Timms: In terms of how a UK court will interpret the Bill, the phrase ''due account'' does the job. The phrase ''utmost account'' would not do the job because it is not familiar in UK law. The answer to the hon. Gentleman's question is yes, but I wanted to phrase my answer slightly more carefully.
 The question asked by the hon. Member for South Cambridgeshire is more general and does not arise specifically from the amendment, although it relates to significant market power conditions. As he said, we have interpreted ''not effectively competitive'' as meaning a market in which somebody has significant market power. He referred to that as a simplification, but we used that interpretation when drafting UK legislation. If Ofcom concludes that nobody has significant market power, clause 80(4) provides that it must withdraw all previous significant market power services obligations that have been imposed.

Andrew Lansley: I had noted that, but I understood that that was in relation to reviews, which is why I raised the point. That is distinct from the original market analysis and determination.

Stephen Timms: I think that clause 80(4) does the job that the hon. Gentleman wants. Of course, Ofcom will carry out analyses. We might need to explore the matter further when we reach clause 80, but his point that there is a simplification compared with what is in the directive is fair.

Andrew Lansley: I am sorry to interrupt the Minister again. Although we can discuss the matter again when we reach clause 80, I did not think that there was a problem under that clause because it relates specifically to subsequent reviews of market power, market analysis and market power determinations, and to the removal of pre-existing SMP conditions. The directive is about not only SMP conditions, but all pre-existing sector-specific obligations. Although this can happen within months, the question is what will happen toward the latter part of next year when Ofcom undertakes initial determinations and examines pre-existing obligations.

Stephen Timms: If, following the market review, nobody has significant market power, it will not be permissible to impose significant market power services conditions at all. That is set out in clause 42. In clause 80, we deal with when there are subsequent reviews. The Bill achieves what is set out in the directive.

Andrew Robathan: As the Minister has said, this is not the only place in which ''utmost'' has been replaced by ''due''. As a non-lawyer, I cannot argue with him on the use of those words; however, I remain concerned that the emphasis of ''utmost'', as provided for in the framework directive, has been weakened by the use of ''due''. I hope that that will not give Ofcom powers that it could abuse—although I suspect that it would not abuse them—to the detriment of people in the market. The framework directive did not intend that.
 I am sure that the Minister's assurances have been given with the full weight of his legal team behind him, so I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 75 ordered to stand part of the Bill. 
 Clauses 76 and 77 ordered to stand part of the Bill.

Clause 78 - European Commission's powers in

Question proposed,That the clause stand part of the Bill.

John Greenway: I will try to be brief, but the Minister will acknowledge that clause 78, and its juxtaposition with clauses 76 and 77, is very important. It gives the European Commission powers to overrule something that Ofcom intended to do in relation to the UK market. It will be worth while putting two or three observations and questions on the record, and teasing the Minister for some answers.
 I understand that no other organisation has any similar power, allowing it to overrule Ofcom simply because it has determined that what Ofcom is proposing may create a barrier to the single market. That suggests that Ofcom proposals to regularise the market in the UK may lead to difficulties depending on the European Commission's view on the market for a particular telecommunications service throughout Europe as a whole. As far as I can see from clause 78—perhaps the Minister will confirm this—there is no right of appeal against the European Commission's decision. Would the Commission's decision be subject to judicial review? 
 If the Commission could overturn something that Ofcom was proposing for our domestic telecommunications market, I presume that it could do the same in another member state—indeed, one would like to think that that situation would be more likely. The Commission could determine that the proposals of another member state's Government or regulator were a barrier to the single market. That, of 
course, would mean a barrier to British telecommunications and media companies pursuing their interests in that member state. 
 I hope that I have described that clearly enough, and I wonder whether the Government intend to monitor comparable arrangements in other member states. Over the years, we have all grown used to the general cry that, although in this country we play by the rules, other member states may be less forthcoming. We have to accept that article 7(4) of the framework directive makes it clear that the Commission should have that power, which I hope the Minister can confirm will be applied as rigorously in other EU countries as it is likely to be in Britain.

Brian White: I have expressed concern in the past about the regulators' club, which was set up as a result of the framework directive. Clause 79 contains rules about the way in which Ofcom relates to the European Commission. Ofcom will be part of the regulators' club, which may be a cosy arrangement or a properly functioning interaction between the regulators. What is the relationship between the regulators' club and the UK Government? How does the regulators' club relate to the European Commission, and is it involved in the determination of the information that is reported to the European Commission? What is the role of the meeting of the regulators? What is their jurisdiction?
 If the answer to that question is none—as I hope it will be—my question is what arrangements are in place to make sure that an old boys' club in which information is quietly exchanged does not come into existence. There are a number of ways to deal with companies with significant market power. I am thinking of the way in which the German regulator has had a cosy relationship with Deutsche Telekom in the roll-out of broadband in order to promote broadband. That is contrary to the spirit of competition, which the European Union has been pushing. This country has a particular interaction with the Republic of Ireland, and clause 79 talks about definitions of the market. I wonder how Ofcom would relate to the European Union if the market were not only the UK but the UK and Ireland.

Stephen Timms: We talked this morning about the extent to which the market with which the Bill deals is increasingly international. Although the market is global rather than simply European, the European markets are significant. We have common rules for regulating the European markets, and in that context it is right that the Commission should play its part in their regulation within the bounds set for it by the directives. As the hon. Member for Ryedale said, such regulation is mandated by article 7(4) of the framework directive.
 In any case, where Ofcom intends to identify a particular market or make a market power determination, during the period given for representations under clause 76 the European Commission may inform Ofcom that it believes that the proposed market identified in the notice or Ofcom's proposed market determination may not be compatible with the single European market or with any Community obligations. In that case, Ofcom must not give effect to its proposals for a further two months. Ofcom must withdraw its proposal if, in accordance with the procedure in article 7(4), the Commission decides within that two-month period that the proposal must be withdrawn. 
 If we are to have a single international market, there inevitably needs to be the possibility of such an intervention taking place. Of course, as the hon. Gentleman rightly says, that should be a possibility in every member state and certainly not only in the UK. I can give him the assurance that he was looking for because there is a firm commitment, which was reaffirmed at the European Council meeting in Brussels only a week or so ago, that every member state is committed to implementing the new telecommunications framework before 25 July. He can be confident that if there are any problems in that process there will be a good deal of pressure and sanction. There is a genuine European Union-wide commitment to implementing the directives, including that particular element of them. There is no getting away from the requirement in article 7(4) of the framework directive, which is very clear. 
 The hon. Gentleman asked what appeal would be available if someone were injured by a decision of the European Commission in those circumstances. The only way would be for the UK Government to take legal proceedings under the treaty to the European Court of Justice. I think that that would be unusual, but that arrangement is formally in place. 
 My hon. Friend the Member for Milton Keynes, North-East asked about the arrangements for the regulators' club, as he described it. There is no jurisdiction for such an institution, and the position that he hopes will apply there will apply. I certainly hope that the national regulatory agencies will be in touch with each other, sharing experiences and keeping each other informed. He rightly drew attention to concerns about arrangements in some countries. I hope that having a common regulatory framework right across Europe—every country is going through the process that this Bill take us through—will mean that there is much more transparency about such arrangements and relationships than there has been in the past. This whole process is an important step in the right direction, addressing the rather uneven pattern seen in Europe in the past. 
 Question put and agreed to. 
 Clause 78 ordered to stand part of the Bill. 
 Clause 79 ordered to stand part of the Bill.

Clause 80 - Review of services market identifications and determinations

John Whittingdale: I beg to move amendment No.83, in
 clause 80, page 76, line 21, leave out from 'must' to 'carry' and insert— 
 'at intervals not exceeding two years from the commencement of the previous analysis of the market concerned, or if, as a result of a change in market conditions, a communications provider notifies them in writing that it requires them to carry out such a review,'.
 This amendment is small, but quite important none the less. Clause 80 deals with reviewing the services market in which a determination has been made that a particular operator has significant market power. Whether that market power exists will, clearly, depend heavily on the particular market that has been identified and studied. 
 Under the terms of the Bill, the review of that services market should take place at ''such intervals as'' Ofcom considers ''appropriate''. That seems to us to give Ofcom too much power, especially since, in this field, it is likely that technology will develop very quickly, as has been said many times during our debates. It is conceivable that a market might change very rapidly. Therefore, it would be helpful to include in the Bill, at the very least, a requirement that Ofcom should re-examine the market 
£''at intervals not exceeding two years from the commencement of the previous analysis of the market concerned''.
 Moreover, where an industry has changed very quickly and the particular player that Ofcom has decided has significant market power can see that the market has changed and that matters are now extremely different from when the review was originally conducted, it is only fair that that player can go to Ofcom and request, in writing, a further review of the services market. That would be the effect of the amendment. It would set down a specific maximum time that could elapse before a review had to be undertaken again, and give any company affected by that the ability to request a review in an even shorter period.

Stephen Timms: I agree that Ofcom needs to keep under review the significant market power determinations that it has made and the conditions that it has set as a result. Clause 80 provides for that. However, I would argue that the timing of those reviews ought to be in the hands of Ofcom and not set by the rather rigid mechanism that the hon. Gentleman proposes.
 We have already agreed that the general duties of Ofcom should include a requirement for it to have regard to the principle that regulatory activity should be 
£''transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed''.
 £That is in clause 3(3)(b). Clause 6(1) requires Ofcom to ensure that regulation does not involve 
£''the imposition of burdens which are unnecessary; or . . . the maintenance of burdens which have become unnecessary''.
 £There is no need for an additional requirement on Ofcom to review significant market power analyses and determinations as a result of market changes. If such changes rendered a review appropriate, Ofcom would already be required to act. 
 I would be loth to set in statute the two-year limit that the hon. Gentleman proposed. We do not know at the moment whether that is the correct frequency. It may well be far too often, and would therefore impose unnecessary work on Ofcom and those required to 
provide information for the analyses that Ofcom would have to carry out. It would be better to rely on the obligations of Ofcom that are already agreed, rather than set what is, inevitably, a somewhat arbitrary time limit. 
 The provisions are simply the sensible next steps, moving on from the initial determinations of significant market power to reviews of the situation. Ofcom is required by the clause to carry out further analyses of the markets for the purposes of reviewing the determinations made on the basis of earlier market analyses and reviewing any SMP conditions set as a consequence. That is very much in keeping with the aim of keeping any regulatory burdens appropriate to what is needed in the market. I hope that on reflection the hon. Gentleman might feel that imposing a strict two-year limit would not be the best way for Ofcom to exercise its responsibilities.

John Whittingdale: I take the Minister's point about setting an arbitrary time scale. I particularly recognise his concern, which I share, that operators should not have to supply huge amounts of information every two years and take up a lot of time doing that when it is quite plain that nothing much has changed. I am slightly more disappointed that he does not recognise the need to give operators at least the power to request a review when something clearly has changed. I hope that his confidence that Ofcom will recognise that change without prompting from the industry is justified, but it is not an issue I particularly wish to press. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Question proposed,{**roman**} That the clause stand part of the Bill.

Andrew Lansley: I did not want to speak to the amendment because the Government accepted what the scrutiny Committee said about the mandatory character of periodic market analyses. I will not dwell on the subject that we previously discussed relating to the withdrawal of obligations. However, it is perfectly clear, not least from what the Minister has just said, that clauses 80 and 81 relate to the review of market analyses, rather than to the original market analyses. Perhaps the Minister will get back to me if there is some reassurance he can give about the nature of the withdrawal of pre-existing obligations.
 I have a question for the Minister. Clause 80(4) will revoke SMP conditions if a subsequent analysis discloses that there is no one with significant market power in relation to the market analysed. The clause and the market analysis relate not only to SMP conditions but, under the Community directives, to conditions under article 7 of the access directive and article 16 of the universal service directive. Perhaps I have missed it somewhere else, but I wanted to be sure that, in so far as a review identifies that a market is effectively competitive, it is not only the case that SMP conditions are withdrawn, but that, where appropriate, access-related and universal service obligations related to whether a market is competitive are also revoked or withdrawn by the mechanism set out in the clause.

Stephen Timms: I would like to reflect on the questions that the hon. Gentleman has raised. I may be able to respond before the end of the sitting, but if not I will drop him a line.
 Question put and agreed to. 
 Clause 80 ordered to stand part of the Bill.

Clause 81 - Review of apparatus market identifications and determinations

Question proposed,{**roman**} That the clause stand part of the Bill.

Andrew Robathan: I shall be brief. The clause is similar to the previous one, in that it deals with a review. We discussed apparatus and fixed telephone lines in your absence this morning, Mr. Atkinson, and in the Minister's absence. We mentioned the extraordinary fact that 3 million people still rent telephones, largely from BT. I wonder whether the apparatus market and the review that pertains to it come from the European directives. If so, from what part of them? As far as I can see, the EU directives do not mention apparatus.

Stephen Timms: We did discuss this earlier. The provisions do not come from the directives. Individual member states can therefore make their own arrangements. We have used the Bill to carry over the arrangements already in the BT and Kingston Communications licences, but that is not required of us by the directives in any way. The hon. Gentleman is right to suggest that the directives are silent on the subject.
 I would like to pick up the point raised by the hon. Member for South Cambridgeshire on pre-existing conditions, and refer him to the transitional provisions in paragraph 6 of schedule 18. He may find what he was looking for there. If he does not, I have no doubt that he will let me know shortly. 
 Question put and agreed to. 
 Clause 81 ordered to stand part of the Bill. 
 Clause 82 ordered to stand part of the Bill.

Clause 83 - Conditions about network access etc.

John Whittingdale: I beg to move amendment No. 199, in
 clause 83, page 79, line 33, leave out 'unduly'.

Peter Atkinson: With this it will be convenient to discuss amendment No. 200, in
 clause 83, page 79, line 35, at end insert— 
 '(this condition to be interpreted in the light of Article 10(2) of the Access and Interconnection Directive)'.

John Whittingdale: Clause 83 is obviously especially important, as it specifies the ability of Ofcom to set conditions when it has identified a provider of communication services as having significant market power. In terms of the conditions that may be imposed on that dominant provider, one of the key obligations is likely to be non-discrimination. By that, I mean a requirement that will prevent the dominant provider from discriminating in favour of the dominant supplier's own downstream businesses, as opposed to supplies of the same services by third party competitors.
 I hesitate to name BT again, but it is the obvious example. It supplies services in competition with other providers on its own network. Obviously, BT's competitors could be placed at a significant disadvantage if the incumbent—in other words, BT—were able to reduce the quality of service, or charge higher prices. 
 Under the current BT licence, which is to be replaced by the new regime established through the Bill, BT is required not to show undue discrimination or undue preference to itself. However, it is not a requirement of the access and interconnection directive that discrimination must be undue for there to be a breach of the non-discrimination obligation. I refer the Minister to paragraph 17 of the article's preamble and article 10 of the directive, in which there is no reference to a materiality threshold—in other words, the degree of discrimination necessary for the measure to come into effect. 
 That is a reflection of European Union competition law, under which there is no need, in the case of an abuse of the dominant position, to prove that there is hindrance of competition. It is enough to show that conduct is likely to produce such an effect. There is also no need to show that the effect would be substantial. Therefore, the requirement for the discrimination to be ''undue'' is not in accordance with European law. The risk is that the mere existence of the word ''unduly'' will imply that Ofcom must consider there to be a threshold of material effect above and beyond that required under European law. Not only is the provision a mis-implementation of the European directive, but it potentially puts BT's competitors in the United Kingdom at a disadvantage compared with those operating in other European Union member states. For that reason, we have tabled amendment No. 199, which would remove the word ''unduly''. 
 Amendment No. 200 is also connected with the principle of non-discrimination. It is designed to ensure that the UK implementation of the principle is interpreted in accordance with the provisions of the access and interconnection directive, which states in article 10(2) that 
''Obligations of non-discrimination shall ensure, in particular, that the operator applies equivalent conditions in equivalent circumstances to other undertakings providing equivalent services, and provide services and information to others under the same conditions and of the same quality as it provides for its own services, or those of its subsidiaries or partners.''
That is a clear definition and a fairly specific requirement. Given that it is set out in those terms, it would be helpful if we could include a reference to the directive and the language in it in the Bill. That is the purpose of amendment No. 200.

Richard Allan: The hon. Member for Maldon and East Chelmsford has picked up on an important point. I hope that the Minister can respond on an issue that Ofcom will face that has not been dealt with well enough in the case of the Oftel regime—the matter of billing by BT's incoming supplier. It is perfectly possible to purchase all one's telephone services from a third-party supplier, but the line still has to be rented from BT.
 BT has no duty to pass on billing information to the third-party supplier, so one receives only a single bill from the third-party supplier, and with that, all the promotional material—the most important bit—for the third-party supplier services. One is left receiving both the billing from BT, and so its presence in the home, and, importantly, all its promotional material. It is clear that BT will have to face such issues. The concern must be whether we are leaving a gap that allows the incumbent supplier to say that that faces due discrimination. There is an argument that the incumbent supplier will have to change its accounting systems and that that will be expensive. One has to respond to that and to allow a certain amount of leeway. However, the interposition of the word ''unduly'' creates a position whereby a third party can prove that there is a problem with a competitive market and that a supplier is discriminating in favour of itself. In future it may not be BT, but another company seeking to defend its position and to impose barriers to a truly competitive market. Under the current terms, it may argue that that is not undue discrimination because it is a small infringement and it would be expensive to change it. 
 There is a balance between the extent to which the infringement of the competitive market takes place and the way in which that judgment is made. The hon. Member for Maldon and East Chelmsford helpfully pointed us to the European Union law framework, which is a fairly basic one that says that we must promote competitive markets and we cannot say that a practice is only slightly anti-competitive and is therefore okay. As making those judgments between the potential cost imposed and the infringement will turn on the definitions in the Bill, I hope that the Minister can clarify his understanding of the way in which it will operate in the context of the real world decisions that regulators face and will face in future.

Stephen Timms: I hope that I can reassure members of the Committee about what these words will be taken to mean. In a way, this returns to our earlier discussion about words being used in UK law that are familiar in UK law. In this case, the term ''undue discrimination'' is well established and well understood in UK law and will not support the lax interpretation about which the hon. Members for Maldon and East Chelmsford and for Sheffield, Hallam rightly expressed concern. The law recognises that some kinds of discrimination are entirely proper and necessary. Businesses routinely offer different terms in different circumstances, and if those differences in terms are based on objective differences—for example, a discount for a big order—that is not a problem. It would be construed as discrimination, but it is not undue discrimination, and there is no problem with it. It is only where equivalent proposals or customers in equivalent circumstances are treated differently that the question of undue or improper discrimination arises. The term ''undue discrimination'' does the job that the directive requires, and the Bill as it stands will give effect to article 10(2) of the access directive without the amendment being made.
 The hon. Member for Sheffield, Hallam made an interesting point and gave a good example. Companies such as Centrica, with its One.Tel service, have complained for a long time that its customers get two bills while BT's customers get a single bill. Oftel recently made a determination on that so that it will be possible in future for One.Tel's customers to receive one bill instead of two, although there is some concern about how long that process will take. That is a good example of the kind of difficulty that arises, and which we certainly want the Bill to address. The form of words in the Bill does the job that is required.

John Whittingdale: I accept the Minister's assurance that the word ''undue'' is well established in English law and that the fear that it might create a certain amount of discrimination below a threshold is unjustified. These are not concerns that we have dreamed up: they have been expressed by competitors in the market. I hope that they will gain some reassurance from the Minister's words. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

John Whittingdale: I beg to move amendment No. 201, in
 clause 83, page 80, line 20, at end insert— 
 '(9A) In relation to SMP conditions authorised by subsection (9), the burden of proof that charges are cost-orientated shall be with the dominant provider.'.
 Another key element in the regulation of a dominant operator that enjoys significant market power is that the price of the services it provides in markets in which it is dominant should be cost-based. The dominant supplier is the only body that will have details on its own costs, and it will be required to make those details available for scrutiny by the regulator. Article 13(3) of the access directive places the burden of proof on the SMP operator that the charges are derived from costs, including a reasonable rate of return. However, there is no statement in the Bill as to where the burden of proof lies. Since it is a requirement of the directive that the burden of proof should lie on the SMP operator, we feel that that should be specified in the Bill. 
 Furthermore, although Ofcom has the power to ask for information from, say, BT, that process relies on Ofcom asking BT the right questions. If we go on to place the burden of proof squarely on the dominant operator—say, BT—that will ensure that the operator is required to provide correct and full information, notwithstanding any misunderstanding by Ofcom as to which costs are involved; that is, notwithstanding Ofcom's asking the wrong question in the first place.

Stephen Timms: The amendment is unnecessary. Subsection (10) gives Ofcom powers to include appropriate obligations where access price controls are imposed. It gives Ofcom powers to include presumptions in any conditions relating to access price controls. That could a presumption that it is for the operator to demonstrate that its charges are based on costs.
 Ofcom should exercise its powers consistently with the directive, on the basis provided in the Bill. The hon. Gentleman is right about what the directive says, and I am confident that Ofcom will perform its duties. If anyone affected by regulatory conditions concludes that Ofcom has not correctly implemented a requirement, they will have a full right of appeal. If the Government take the view that any international obligation has been incorrectly implemented, they will be able to direct Ofcom under clause 5. 
 I think that the concerns that the hon. Gentleman rightly raises are addressed by the Bill as it stands.

John Whittingdale: I draw some reassurance from the Minister's comments. Although it would still be helpful if the matter could be set out in the Bill in black and white, the Minister has nevertheless drawn attention to other provisions in the Bill that may have the same effect. On the basis of our trusting mood, we accept the Minister's reassurances, and I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

John Greenway: I beg to move amendment No.84, in
 clause 83, page 80, line 40, leave out 'access' and insert 'services'.
 This is a small, but none the less important query. Clause 83 deals with conditions about network access. However, its terms refer to the services market. We need to be clear that we are focussing on the right market, namely access markets, not services markets. Without the amendment, is there not a danger that obligations could be imposed in markets in which the provider does not have market power?

Stephen Timms: I hope that I can take further advantage of the trusting mood in the Committee and persuade the hon. Gentleman that this amendment is also unnecessary.
 The concept of network access for the purposes of the Bill already includes services to any extent that is relevant. If he looks at clause 146(3) in line 40 on page 133 he will see that network access is defined in relation to services, facilities and arrangements. The point that he raises is covered there.

John Greenway: I am grateful to the Minister and I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 83 ordered to stand part of the Bill.

Clause 84 - Conditions about network access pricing etc.

Question proposed, That the clause stand part of the Bill.

Andrew Lansley: I can be brief. In subsection (2) Ofcom is required, in accordance with paragraph 13(1) of the access directive, to take account of the extent of investment, but the directive goes on to say that what should be taken into account is not simply the investment made by the operator but to
£''allow him a reasonable rate of return on adequate capital employed, taking into account the risks involved.''
 £Can we be assured that that is intended to be what clause 84(2) actually delivers?

Stephen Timms: I clearly need to bring copies of the directives to future sittings of the Committee. The answer is yes
 Question put and agreed to. 
 Clause 84 ordered to stand part of the Bill. 
 Further consideration adjourned.—[Mr. Jim Murphy.] 
 Adjourned accordingly at six minutes past Seven o'clock till Thursday 19 December at five minutes to Nine o'clock.